Wednesday, December 05, 2012

Planning for (fiscal) miracles, by Antonio Fatas: The debate in the US about
how to deal with the "fiscal cliff" has produced a counterproposal by the
Republicans on how to avert a crisis. The proposal is criticized by many because
of its lack of details (see
here,
here,
here and
here). The way the proposal avoids dealing with the real issues and suggests
solutions that do not impose a cost on anyone reminds me of some of the debates
in Europe about finding a plan to deal with Greek government debt or the
capitalization of Spanish banks. In all these cases you hear proposals that seem
to generate resources without anyone having to pay for them. Republicans in the
US want to raise revenues without increasing tax rates, cutting spending without
really cutting it. And the Spanish government will bailout banks without
imposing any cost on taxpayers. In some cases these proposal have no logic in
others there is some logic but a lot of wishful thinking that generates economic
miracles. ...

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Miracles Can Happen, But Probably Won't

Antonio Fatas reacts to the Republican counterproposal on the budget:

Planning for (fiscal) miracles, by Antonio Fatas: The debate in the US about
how to deal with the "fiscal cliff" has produced a counterproposal by the
Republicans on how to avert a crisis. The proposal is criticized by many because
of its lack of details (see
here,
here,
here and
here). The way the proposal avoids dealing with the real issues and suggests
solutions that do not impose a cost on anyone reminds me of some of the debates
in Europe about finding a plan to deal with Greek government debt or the
capitalization of Spanish banks. In all these cases you hear proposals that seem
to generate resources without anyone having to pay for them. Republicans in the
US want to raise revenues without increasing tax rates, cutting spending without
really cutting it. And the Spanish government will bailout banks without
imposing any cost on taxpayers. In some cases these proposal have no logic in
others there is some logic but a lot of wishful thinking that generates economic
miracles. ...